Won continues slide despite govt efforst
Won continues slide despite govt efforst
SINGAPORE (Reuters): Asian currencies were shrouded in gloom
yesterday as the South Korean won sank to new lows despite
government efforts to calm shaky markets.
The won hit its daily lower limit of 1,565.9 to the dollar
within the first half hour of trade, down almost seven percent
from Tuesday's 1,460 close. Trading was suspended for the rest of
the day.
A Finance Ministry suspension of business at five merchant
banks and worries about Seoul's ability to redeem short-term
foreign debt obligations precipitated the won's descent.
Dealers scoffed at Finance Minister Lim Chang-yuel's package
of measures to stabilize the markets and draw in foreign funds,
focusing instead on the suspension of the banks after last week's
closure of nine merchant banks.
"The measure is just a peanut. Foreign investors are not
fools," said a foreign bank dealer in Seoul.
The central Bank of Korea sold dollars in value-today and
value-tomorrow transactions in a desperate bid to prevent
corporate defaults.
The Taiwan dollar fell through the T$32 support level to the
U.S. dollar, ending at T$32.229 from Tuesday's T$31.963 close.
Taipei dealers attributed the drop partly to active non-
delivery forward buying of U.S. dollars by foreign fund managers
following the Taiwan dollar's recent failure to extend its gains
significantly.
But exporter U.S. dollar sales and fund inflows to the stock
market were expected to contain the Taiwan dollar's decline.
The Hong Kong dollar hit a six-week low of 7.7450/60 to the
U.S. dollar and forwards rose sharply in the face of short-
selling by overseas players.
"We're hearing there are a lot of European funds trying to get
out of the stock markets in Korea and Hong Kong," a said U.S.
bank dealer in Singapore.
In Southeast Asia, the Indonesian rupiah remained in the
hotseat as players swooped on any mention of President Soeharto's
health in thin, easily-spooked year-end markets.
The Malaysian ringgit fluctuated in a wide range but remained
largely depressed by the plight of the won and rupiah.
Talk of large dollar offers from agents of Bank Negara
Malaysia above the 3.6850/6900 levels cushioned the ringgit's
falls, but dealers said there was dollar buying interest around
3.6400.
The Singapore dollar looked soft in the face of strong local
and offshore bids for the U.S. dollar below the 1.62 level.
"Technically, the market is looking at 1.63. The Singapore
dollar still has a long way to go compared with the others,
especially the ringgit," said Ishak Ismail, market intelligence
analyst at I.D.E.A.
The Thai baht hovered around 42.10/25 to the dollar in thin
offshore markets for most of the day. The onshore market was
closed for the Constitution Day holiday.
Dealers shrugged off comments by Deputy Prime Minister
Supachai Panitchpakdi that Thailand may consider lowering
interest rates after the first quarter of 1998.
The Philippine peso finished soft at 35.24 to the dollar
against a previous 35.105 after the central bank cut its
overnight borrowing rate to 11 percent from 12 percent.